Blackstone Closes Record $8B Credit Fund

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Blackstone has just completed the final close of Blackstone Real Estate Debt Strategies IV. With $8 billion of total commitments, the investment vehicle now holds the distinction of being the largest real estate credit fund raised in history. BREDS IV’s launched in 2019, three years after the predecessor fund closed with $4.8 billion in commitments.

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There’s a strong demand for capital in the real estate debt markets and Blackstone’s years-long track record of delivering for investors across multiple market cycles proved highly attractive to contributors, just as it had with contributors to predecessor fund BREDS III which, having closed in 2016 with $4.8 billion in commitments, now stands as the second-largest real estate credit fund ever raised.

It was a perfect storm for BREDS IV, which saw an uptick in interest even before COVID-19 was on the horizon. And as the end of the fundraise approached amid the pandemic, the environment changed, creating greater opportunity for the strategy, and enabling the fund to attract more capital than originally anticipated. As noted in a May 2020 report by PERE, “Investment in real estate debt can benefit as the coronavirus and late-cycle considerations prompt a turn to lower-risk strategies.”

The in crowd

Blackstone has not publicly divulged the list of contributors to BREDS IV, but some investors have made their participation known in public documents. Texas County & District Retirement System committed $150 million to the fund in 2019, and San Francisco Employees’ Retirement System’s $50 million investment closed this June. Illinois Municipal Retirement Fund, having contributed $100 million to BREDS III in a follow-on investment in 2015, gave $100 million to BREDS IV in a follow-on investment.

BREDS IV will lend flexible capital around the world and it will employ various investment strategies, including liquid securities, structured solutions to financial institutions and corporate credit. The BREDS real estate debt platform, which launched in 2008 and recorded approximately $26 billion of assets under management as of the close of the second quarter, invests in public and private markets, predominantly in the U.S. and Europe. According to the PERE report, real estate debt vehicles in the market are on track to capture nearly $55 billion in 2020, and North American funds will comprise roughly half of the total.